The earned income tax credit and infant health revisited.

Hoynes, Miller, and Simon (2015), henceforth HMS, report that the national expansion of the Earned Income Tax Credit (EITC) is associated with decreases in low birth weight. We question their findings. HMS's difference-in-differences estimates are unidentified in some comparisons, while failed placebo tests undermine others. Their effects lack a plausible mechanism as the association between the EITC and prenatal smoking also fails placebo tests. We contend that the waning of the crack epidemic is a possible confound, but we show that any number of policies directed at poor women also eliminate the effect of the EITC when aggregated to the national level. Identifying small, causal effects of a national policy at a single point in time is exceedingly challenging.

Effects of state-level Earned Income Tax Credit laws in the U.S. on maternal health behaviors and infant health outcomes.

The purpose of this paper is to investigate the effects of state-level Earned Income Tax Credit (EITC) laws in the U.S. on maternal health behaviors and infant health outcomes. Using multi-state, multi-year difference-in-differences analyses, we estimated effects of state EITC generosity on maternal health behaviors, birth weight and gestation weeks. We find little difference in maternal health behaviors associated with state-level EITC. In contrast, results for key infant health outcomes of birth weight and gestation weeks show small improvements in states with EITCs, with larger effects seen among states with more generous EITCs. Our results provide evidence for important health benefits of state-level EITC policies.

The Dynamics of Wealth Inequality and the Effect of Income Distribution.

The rapid increase of wealth inequality in the past few decades is one of the most disturbing social and economic issues of our time. Studying its origin and underlying mechanisms is essential for policy aiming to control and even reverse this trend. In that context, controlling the distribution of income, using income tax or other macroeconomic policy instruments, is generally perceived as effective for regulating the wealth distribution. We provide a theoretical tool, based on the realistic modeling of wealth inequality dynamics, to describe the effects of personal savings and income distribution on wealth inequality. Our theoretical approach incorporates coupled equations, solved using iterated maps to model the dynamics of wealth and income inequality. Notably, using the appropriate historical parameter values we were able to capture the historical dynamics of wealth inequality in the United States during the course of the 20th century. It is found that the effect of personal savings on wealth inequality is substantial, and its major decrease in the past 30 years can be associated with the current wealth inequality surge. In addition, the effect of increasing income tax, though naturally contributing to lowering income inequality, might contribute to a mild increase in wealth inequality and vice versa. Plausible changes in income tax are found to have an insignificant effect on wealth inequality, in practice. In addition, controlling the income inequality, by progressive taxation, for example, is found to have a very small effect on wealth inequality in the short run. The results imply, therefore, that controlling income inequality is an impractical tool for regulating wealth inequality.

How can have an influence to be a housewive on women‘s fiscal awareness? The case of Spain / ¿En qué medida puede influir -ser ama de casa- en la conciencia fiscal de las mujeres? El caso de España

The authors analyze the Spanish fiscal awareness through citizens‘ perception on the tax system. A questionnaire is used for exploring the most influential factors: knowledge of the system, acceptance of fraud, use of social benefits without adequate compensation, and satisfaction and confidence in institutions. Once the contingency table is built and the strength of the statistical significance is analyzed - by Cramer's V coefficient - binary logistic regression models, multinomial logistic regression and ordinal regression are applied. Educational level and employment status were taken as covariates, demonstrating the lack of statistical significance of gender in tax awareness. There are significant differences between men, women and the group of housewives. These women show lower levels of fiscal awareness, a greater lack of knowledge about the system, more acceptance of fraud, more dissatisfaction with administrations and further distrust towards their fellow citizens

Los autores analizan la conciencia fiscal de los ciudadanos españoles sobre el sistema fiscal. Se utiliza un cuestionario que explora los factores determinantes del sistema: conocimiento y aceptación del fraude, uso de prestaciones sociales y la satisfacción y la confianza en las instituciones. Se construye una tabla de contingencia y se estudia su significación estadística mediante el Coeficiente V de Cramer, modelos de regresión logística binaria, multinomial y regresión ordinaria. Como covariables se tomaron el nivel educativo y la situación laboral, demostrando la falta de significación estadística del género en la conciencia fiscal. Si existen diferencias significativas entre hombres y el grupo amas de casa. Estas muestran niveles más bajos de conciencia fiscal, un menor conocimiento del sistema, mayor aceptación del fraude menor confianza en las administraciones y hacia sus conciudadanos

Updated U.S. Congressional Budget Office data reveal unprecedented increase in inequality.

The U.S. Congressional Budget Office recently updated its authoritative data series on household incomes, 1979-2005. The new data reveal a sharp increase in income inequality over the past few years. The increase in income inequality (both pre- and post-tax), as measured by the change in the shares of income going to different income classes, was greater from 2003 to 2005 than over any other two-year period covered by the CBO data.

Limited take-up of health coverage tax credits: a challenge to future tax credit design.

The Trade Act of 2002 created federal tax credits to subsidize health coverage for certain early retirees and workers displaced by international trade. Though small, this program offers the opportunity to learn how to design future tax credits for larger groups of uninsured. During September 2004, the most recent month for which there are data about all forms of Trade Act credits, roughly 22 percent of eligible individuals received credits. The authors find that health insurance tax credits are more likely to reach their target populations if such credits: 1) limit premium costs for the low-income uninsured and do not require full premium payments while applications are pending; 2) provide access to coverage that beneficiaries value, including care for preexisting conditions; 3) are combined with outreach that uses easily understandable, multilingual materials and proactive enrollment efforts; and 4) feature a simple application process involving one form filed with one agency.

The hefty penalty on marriage facing many households with children.

Over the past seventy years Congress has enacted dozens of tax and transfer programs, giving little if any attention to the marriage subsidies and penalties that they inadvertently impose. Although the programs affect both rich and poor Americans, the penalties fall most heavily on low- or moderate-income households with children. In this article, Adam Carasso and Eugene Steuerle review important penalties and subsidies, explain how they work, and help fill a big research gap by beginning to provide comprehensive data on the size of the penalties and subsidies arising from all public programs considered together. Marriage penalties arise because of the combination of variable U.S. tax rates and joint, rather than individual, filing by married couples for benefits and taxes. If graduated taxes were accompanied by individual filing or if all income and transfers were taxed at a flat rate, there would be no marriage penalties. Specifically, the penalties are a result of policymakers' efforts to achieve the goal of progressivity--giving greater tax and welfare benefits to those with lower income--while trying to keep down program costs. Thus benefits in transfer programs fall, sometimes steeply, as households earn more income. Combining the direct tax rate in the tax code and the benefit reduction rates in the transfer system can result in extremely high effective marginal tax rates for many low- to moderate-income families-rates far higher than those of families earning over 90,000 dollars. These high rates lead to the marriage penalties because additional income brought into a household by marriage thus causes other benefits to be reduced or lost altogether. In extreme cases, households can lose a dollar or more for every dollar earned. In recent years lawmakers have begun to try to reduce marriage penalties, primarily by reforming welfare and cutting taxes, but huge penalties remain. The authors offer several options for reducing or eliminating the marriage penalty and recommend two in particular. The first is to set a maximum marginal tax rate for lower-income individuals, similar to the maximum rate set for highest-income individuals. The second is to provide individual wage subsidies to lower-income earners, so that such workers who marry can combine their income with that of their spouse without incurring penalties.

Pathbreaking Congressional Budget Office study shows dramatic increases in income disparities in the 1980s and 1990s: an analysis of the CBO data.

Researchers at the Center on Budget and Policy Priorities analyze the data presented in a Congressional Budget Office study that includes the best data any agency or institution has compiled on income and tax trends in recent decades. The CBO report shows that the average after-tax income of the richest 1 percent of Americans grew by $414,000 between 1979 and 1997 (after adjusting for inflation) while average after-tax income fell $100 for the poorest 20 percent of Americans and grew a modest $3,400 for those in the middle of the income spectrum. In percentage terms, after-tax income grew an average of 157 percent over this period for the top 1 percent, rose a modest 10 percent for the middle 20 percent, and was effectively unchanged for those in the bottom fifth. Income gaps between rich and poor and between the rich and the middle class widened in the 1980s and 1990s and reached their widest point on record in 1997. Even before enactment of the 2001 federal tax cuts, the percentage of income Americans pay in federal taxes has declined since 1979 for every income group. By one key measure, the percentage of income paid in federal taxes fell the most for those with the highest incomes.

Defusing the baby boomer time bomb: projections of after-tax income in the twenty-first century.

There has been a major national policy debate over the prospective tax burden facing future generations of workers as a result of the impending retirement of the baby boom generation. However, the real determinant of well-being is after-tax income, not the tax rate on before-tax income. This study constructs a series of projections of after-tax income, for workers and families at different points in the income distribution, to examine the effects of several different trends. The author first calculates the extent to which after-tax income can be expected to decline as the result of the aging of the baby boomers, then calculates the impact on after-tax income for families at different points in the income distribution of a continuation of recent trends in wage inequality. He also constructs a category of "after-tax, after-health-care spending" income, which examines the impact of the continued rapid growth in health care costs. The findings suggest that the continuation of recent trends in inequality and health care cost growth will have a much larger effect on future living standards than will the aging of the baby boomers.